We, the undersigned national consumer advocacy groups, were delighted to read in your December 22, 2005 letter to the Philadelphia Inquirer (entitled “I support ban on payday lending”) that you would sign legislation that would stop payday lending in the Commonwealth. We applaud your recognition of the predatory nature of the payday lending industry and the adverse impact that their illegal business is having on the citizens of Pennsylvania.

We are disturbed by the devastating impact of payday lending on working families across the country. We are dismayed by the success the industry has had in pushing legislation through state assemblies that carves out an exemption from the state’s usury limits. These carve-outs allow lenders to trap borrowers in loans at a typical annual interest rate of 400 percent. The payday lending industry backs HB 1478, sponsored by Rep. Chris Ross, because it is carve-out legislation designed especially for them. This bill, even with strengthening amendments, would legalize a form of lending that is currently illegal in Pennsylvania.

We therefore must applaud your recognition of payday lenders’ illegitimate claim to legalization in Pennsylvania based on the community presence they’ve established through years of circumventing state law. This situation has unfortunately resulted in payday lenders helping themselves to outrageous and illegal interest rates and fees at the expense of Pennsylvania’s most vulnerable working families.

Thank you for your determination to protect Pennsylvania’s citizens, and your public assurance that you support and would sign Senate Bill 101. SB 101 would ensure enforcement of the Commonwealth’s existing small loan law, forcing payday lenders to comply with Pennsylvania’s consumer protection regulations or leave the state. We appreciate your support of this legislation. We urge you to veto industry legislation, such as HB 1478, that legalizes payday lending.

If you have any questions, please contact Jean Ann Fox, CFA, at 757-867-7523.